iPhone production at risk from corona virus

Apple wants more suppliers to make iPhones than last year. The tech giant asked its suppliers to make around 80 million iPhones in the first half year, reports the Japanese newspaper Nikkei Asian Review. That is 10 percent more than last year.

But the factories where the iPhones are assembled are also struggling with the consequences of the corona virus outbreak. And that could mess up the schedule, an anonymous supervisor from one of Apple’s suppliers told Nikkei.

This is possible, for example, if there are problems with the supply of raw materials, the assembly or testing of the equipment and shipping, an analyst says to Bloomberg.

Around 10,000 people work directly for Apple in China. Many Apple employees were home for the Chinese New Year celebration, but it is unclear whether they can return to the factory due to travel restrictions imposed by the Chinese government.

But many more people work for manufacturers that assemble iPhones and Apple Watches. Several suppliers warn that production may be endangered by the corona virus outbreak.

Analyst Dan Ives of Wedbush Securities Inc. informs Bloomberg that suppliers can start to feel flown. “If the outbreak spread, it could have a negative effect on the chain of suppliers. That would be a concern for investors,” he says.

Foxconn is one of the manufacturers. They have large factories in Zhengzhou. This million-dollar city lies some 500 kilometers from the city of Wuhan, where the corona virus first broke out.

The manufacturer informs Bloomberg that it is keeping a close eye on the situation and is following all health advice. The company has taken measures to meet all obligations.

According to the Nikkei Asian Review, Apple wants the manufacturers to produce 65 million new iPhones in the first half of this year: most of them are phones from the current iPhone 11 series. Of the cheaper device that was not yet announced, around 15 million would have been ordered by Apple.

Apple asked suppliers earlier to increase the production of parts, one of which is TSMC that supplies processors. That company should also benefit from a successor to the iPhone SE: considerably cheaper than Apple’s flagship smartphones.

Apple is expected to unveil a new cheaper model this spring. Its production would start in February. After the summer, it traditionally shows its new more expensive smartphones.

Apple today comes after market with quarterly figures. Analysts expect a turnover of $ 88.5 billion. That would be an increase of 1.2 billion dollars compared to the same period last year.

They will look in particular at the demand for Apple products in China: does that demand continue to increase or do Chinese people prefer brands from their home market, such as Huawei, Xiaomi and Oppo.

In addition, a close look is taken at how the Apple TV + streaming service is doing in the streaming service war in which the company ended up together with Netflix and Disney.

In the past quarter, the Apple share increased by a quarter. On an annual basis that is even an increase of almost 100 percent.